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Noble Corp (NE) Acquires Newbuild Jackup, Receives Contract

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Noble Corporation plc NE announced the purchase of Gusto MSC CJ46 design jackup rig from the PaxOcean Group. Also, the company has been awarded a drilling contract for the same. The company has an option for the purchase of a second newbuild CJ46 jackup from PaxOcean.

The total amount for the purchase was $93.75 million, of which a payment of $33.75 million has been made in cash. The balance of the payment or $60 million will be seller-financed at a 4.25% interest rate paid in cash and 1.25% paid in kind over the term of the financing of four years. The initial amount was paid by the company through existing cash balances.

Constructed at the PaxOcean Graha shipyard in Batam, Indonesia, the newbuild jackup will be named the Noble Johnny Whitstine. The jackup is equipped to operate in moderate environments and facilitates operations in water depths of about 375 feet along with well depths of 30,000 feet. The rig has a modern drilling control system and adaptable 70 feet x 40 feet envelope cantilever skidding system along with two blow out preventers that stimulate the rig's enhanced drilling capabilities.

The jack up has been awarded a drilling contract in the Middle East region with a three-year primary term along with a one-year option. The rig is scheduled to begin work in early 2019. The dayrate for the jackup has not been revealed.

Per the database of Bassoe Offshore, there are 30 jack-ups of this design. Of this, five are drilling, seven rigs are warm stacked and 18 rigs are under construction.

Moreover, rising oil prices are anticipated to drive demand for rigs. However, dayrates are not expected to improve until 2019. Marketed utilization is required to return to 85% for pricing to improve steadily.

Price Performance

In the past year, Noble Corp’s shares have improved 53.7% compared with the industry’s 11% rise.


Zacks Rank & Stocks to Consider

Noble Corp currently carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Petroleo Brasileiro S.A. PBR or Petrobras SA, Helix Energy Solutions Group, Inc HLX and TC Pipelines, LP TCP. All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.

Helix Energy offers specialty services to the offshore energy industry. The company delivered an average positive earnings surprise of 66.7% in the trailing four quarters.

TC Pipelines purchases, owns and actively participates in the management of U.S.-based natural gas pipelines and related assets. The company delivered an average positive earnings surprise of 3.7% in the last four quarters.

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